Relating to property taxes and local government funding by modifying the methodology for determining actual value of property, certain levy rates, bonding procedures, assessment protests, and assessment limitations of certain classes of property, and including retroactive applicability provisions

Actual value is generally required to be the fair and reasonable market value. “Market value” is defined as the fair and reasonable exchange in the year in which the property is listed and valued between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and each being familiar with all the facts relating to the particular property, but excluding certain abnormal sales. The bill provides that for assessment years beginning on or after January 1, 2027, but before January 1, 2030, the actual value of each individual residential, commercial, and industrial property, including after adjustments to actual values made as the result of equalization, shall not exceed 100 percent of the actual value of the property for the immediately preceding assessment year unless the property was not assessed in the immediately preceding assessment year, the property changed ownership, the property’s boundaries change, there is a change to the property’s classification, or new construction, additions, or improvements have been made to the property other than normal and necessary maintenance or repairs, not amounting to structural replacements or modification, and cost of the construction, additions, or improvements exceeds percent of the property’s actual value. The bill provides that for assessment years beginning on or after January 1, 2030, the actual value of each such individual property, including after adjustments to actual values made as the result of equalization, shall not exceed the product of the annual inflation factor, as defined in the bill, and the actual value of the property for the immediately preceding assessment year unless the property was not assessed in the immediately preceding assessment year, the property changed ownership, the property’s boundaries changed, there is a change to the property’s classification, or new construction, additions, or improvements have been made to the property other than normal and necessary maintenance or repairs, not amounting to structural replacements or modification, and the cost of the construction, additions, or improvements exceeds percent of the property’s actual value. The bill defines “annual inflation factor” to be an index, expressed as a percentage, determined based upon the consumer price for all urban consumers for the midwest region, but shall not be less than 100 percent nor greater than 103 percent. The bill also makes conforming changes to other provisions of law relating to the valuation of property. DIVISION II —— MODIFICATION OF ASSESSMENT LIMITATIONS.21(4) establishes the calculation for assessment limitations (rollback) for residential property and agricultural property. The bill strikes the calculation of the residential property assessment limitation for assessment years beginning on or after January 1, 2026, and strikes the provision within the agricultural property assessment limitation calculation that limits growth of residential or agricultural property to the growth in the other classification (ag-residential tie). The bill increases assessment limitations for residential property each assessment year from the assessment year beginning January 1, 2026, until the assessment limitation reaches percent for assessment years beginning on or after January 1, 2028. By operation of the scheduled increases to the residential property assessment limitation, the assessment limitation applicable to that portion of commercial, and industrial property that is equal to or less than $150,000 is also increased. This division of the bill applies retroactively to assessment years beginning on or after January 1, 2026. DIVISION III —— PROPERTY TAX LEVY RATES. Under the bill, for the budget year beginning July 1, 2027, and each budget year thereafter, and notwithstanding any provision of law to the contrary, the maximum levy rate that may be imposed for a property tax levy by a governmental entity generally shall not exceed the levy rate for such property tax levy imposed by the governmental subdivision for the budget year beginning July 1, 2026, unless a higher levy rate is approved at election. The bill includes provisions to account for new voter-approved levies. Additionally, the limitation on any property tax levy rate under the bill may be increased provided the question has been submitted at the general election and received percent of the votes cast on the proposition to authorize the levy rate increase for the proposed budget year. Under the bill, if the governmental entity is located in an area that is the subject of a governor’s proclamation of a state of disaster emergency or the declaration of a major disaster by the president of the United States, the limitation on any property tax levy rate may be temporarily increased for a budget year, unless approved at election for additional years. Under the bill, if the governmental entity is a city with a population of 5,000 or less, the city council may certify levy rates in excess of the rate limitation without an election. However, if at any time within days following certification of the city’s budget, a petition is filed with the clerk of the city asking that the question of exceeding the levy rate limit be submitted to the registered voters of the city, the council shall direct the county commissioner of elections to call a special election upon the question of exceeding the levy rate limitation. DIVISION IV —— PROPERTY ASSESSMENT PROTESTS.37 establishes the period of time for filing protest of a property assessment with the local board of review. The bill amends the period of time for filing protests of property assessment from ending on April to ending on May 30. The bill also makes corresponding changes to other deadlines following that change to the protest filing period. DIVISION V —— BONDING. The bill modifies the procedures and requirements for the issuance of certain bonds and indebtedness by various political subdivisions. Counties and cities may generally contract indebtedness and approve the issuance of general obligation bonds to carry out an essential county purpose or essential corporate purpose without voter approval, while the issuance of general obligation bonds to carry out a general county purpose or general corporate purpose generally requires voter approval by a percent threshold. Current law also establishes circumstances under which the county or city may pursue the issuance of general obligation bonds for a general county purpose or general corporate purpose without voter approval, subject to the filing of a qualifying petition by eligible electors requesting an election. The bill provides that all bond issuances for essential county purposes or essential corporate purposes are subject to an election if a petition is filed that is signed by eligible electors of the applicable jurisdiction equal in number to percent of the persons in the jurisdiction who voted for the office of president of the United States at the last preceding general ele